The Indiana Long Term Care Insurance Program is a public-private partnership between the public Medicaid office and private LTC insurance companies. To encourage individuals to plan for their LTC needs, the state of Indiana provides an incentive. When put simply, for each dollar of long-term care benefit provided by the policy, a dollar of assets is protected.
This partnership program basically allows policyholders to protect all of his assets from the required Medicaid spend down if he purchases a minimum amount of coverage as required by the State. This is termed as the asset protection feature of the policy.
However, the program protects assets but not income. This means, Medicaid would take into consideration the income a person receives when determining whether he qualifies for Medicaid benefits. This income includes interest and dividends whether taken directly or reinvested. It also includes social security benefits, pension payments, and minimum distributions from retirement accounts.
Moreover, the state’s partnership program also protects the person’s assets from the recovery of Medicaid benefits from his estate. This allows all his protected assets to be inherited by his heirs even though he has received Medicaid benefits during his lifetime.
In terms of income tax benefits, the premium paid for a partnership policy is deductible on the state’s tax return. In addition, the premium may qualify as a deduction on Schedule A of the Federal tax return, subject to the 7.5% deduction floor on medical expenses.
Furthermore, the Indiana Long Term Care Insurance Program must contain certain provisions to qualify for the program. However, qualifying does not increase the cost. The policy would be comparable in price to any policy with the same features. Inflation protection is one of the provisions required. It requires the daily benefit as well as the policy’s maximum benefit to increase at a current compounded rate of 5% annually. This will provide some protection against future increases in the cost of care. Other required provisions include benefit triggers and definitions as selected by the program.
Indiana’s partnership policy comes in two types, namely “comprehensive” policy and “long term care facility.” A comprehensive policy provides payment for nursing home care and for services received while the policyholder remains at home while long term care facility policy provides benefits for institutional care only.
In purchasing a policy in the state, there are a set of standards set by the State and the most important consideration is the person must be a resident of Indiana.